Court Sides With Motorola, Enjoins Microsoft Product Sales in Germany

A German court today ruled in favor of Motorola Mobility Holdings in a legal dispute with Microsoft over video patents.

A Regional Court in Mannheim, Germany issued an injunction on the sales of Microsoft's Xbox 360 gaming console, Windows 7, Internet Explorer and Windows Media Player 12 in Germany. Those products were found to violate Motorola Mobility's patents associated with video codec technology, according to a Dow Jones Newswire account. The codec, H.264, is widely used for video playback across the Web and in various mobile devices.

The German court's ruling today means that Microsoft's products are technically banned from sales in Germany. Motorola Mobility has suggested that it would accept royalty payments to resolve the matter, according to the Dow Jones Newswire story. However, the sales will likely still continue in Germany for a time because Microsoft previously obtained a restraining order from a U.S. District Court in Seattle. The restraining order is based on the idea that regulatory authorities need time to evaluate Motorola Mobility's licensing before the ban should take effect.

Because Motorola's patented technology in the H.264 video codec is necessary to support standards widely used by industry, it falls under the category of "standard-essential patents," which is of interest to government regulatory authorities.

Microsoft and Apple have separately complained to the European Commission that Motorola Mobility is demanding too much for its essential patents, which are supposed to be offered on "fair, reasonable and nondiscriminatory" (FRAND) terms to all companies that depend on them. In Microsoft's case, Motorola Mobility wants 2.25 percent of net Xbox sales.

While the dispute concerns Motorola Mobility and Microsoft, larger issues are at play. Google is in the process of getting final regulatory approvals to buy Motorola Mobility, having already secured U.S. and European Union approvals to do so. Google's management has backed Motorola Mobility's decision to seek 2.25 percent from Microsoft. Consequently, this dispute could be characterized as part of a broad legal struggle between Google and Microsoft.

Google certainly would have cause to increase Microsoft's pain on the litigation front. For instance, in recent years, Microsoft has extracted royalties from Google's hardware partners that use the Google-fostered, Linux-based, Android mobile operating system. Android currently is the market leading mobile OS, competing with Microsoft's Windows Phone. So far, Microsoft claims that 70 percent of original equipment manufacturers have established agreements with it over non-FRAND patents purportedly violated by the use of Android. Last year, investment banking firm Goldman Sachs estimated that Microsoft had drawn down $444 million in royalties from its intellectual property claims on Android.

While government regulatory agencies have an interest in supporting FRAND concepts, with the aim of fostering competition among companies and enabling commonly used technologies, royalty costs for FRAND licenses likely represents a legal gray area. According to a Free Software Foundation blog post, offering FRAND licensing just entails making the license available and publishing the terms.

Microsoft today issued statement, claiming the high ground on FRAND licensing and noting the restraining order.

"Motorola is prohibited from acting on today's decision, and our business in Germany will continue as usual while we appeal this decision and pursue the fundamental issue of Motorola's broken promise," a Microsoft spokesperson stated.

Microsoft reacted earlier to this court case as it was unfolding. Last month, the company announced that it was moving a European product distribution center located in Germany to the Netherlands.

Microsoft updated an August security advisory this week to urge organizations using the Lightweight Directory Access Protocol in supported Windows systems to implement some configuration changes manually.